Iowa Farmers' Business and Farm Transfer Plans: A Comparison between 2019 and 2006

In 2019, we conducted a survey of family farms in Iowa with the support of the Beginning Farmer Center and Iowa State University Extension and Outreach. Our goal is to compare the attitudes and motives behind farm succession, with a focus on intangible assets rather than physical assets, revealed in our 2019 survey with those revealed in the 2006 Iowa Farm Transfer Project. Our hope is that the data obtained in 2019 and 2006 in the state of Iowa will provide insights into the mechanics of farm business transfers over time. From July to October 2019, we received a high return rate-almost 30%-from 886 farmer respondents, which shows the strong feelings farmers have about their future. Among the respondents, 739 said that they are still operating a farm in 2019; and thus, they formulate our estimation sample for the remainder of the policy brief. Our survey respondents were 95.18% male and 4.8% female. Of the respondents, 90% intend to grow crops, forage, or livestock for commercial purposes, and 86% consider the current economic position of their farm business to be from fair to excellent. In 2019, the greatest majority of respondents, 82%, considered farming their principal occupation, which is a huge change since 2006, when only a little over half of the respondents declared the same. Most respondents consider their farms a sole proprietorship, with partnerships of husbands and wives being the second most common. In 2006, farm labor came mostly from family members employed part time; however, 2019 saw a significant increase of family members employed full time on the farm. In 2019, there was an increase in both respondents claiming that the farmer made most farm decisions and a significant decrease in those claiming that the farmer alone, with some successor input, made most farm decisions. As the greatest majority of successors do not have total responsibility for the farm, no decisions stood out as being controlled by the successor alone; in fact, the numbers have decreased. In 2006, the majority of respondents indicated that they will semi-retire; furthermore, respondents who will never retire outnumbered those who will. In 2019, over half of respondents indicated that they would semi-retire; and, while those who claimed they will retire has remained unchanged, the number of farmers responding they will never retire decreased significantly. In 2006, the average age farmers planned to retire or semi-retire was 67; however, 2019 saw that number increase to 70. The majority of respondents indicated that advancing age is the main reason for retirement. Furthermore, the majority of farmers declared that, upon retirement, they will continue to work the same as they are now, just less intensely. The second most common response was that they will help out at busy times only-very few respondents indicated that they will have no involvement on the farm. Among those who said they would retire in 2006, a little above half of respondents answered that they wouldn't move from their current home, while in 2019 that same number increased to 61%. Farmers in 2019 still most commonly identify income from Social Security as the main source of income once retired; in fact, the number doing so has increased since 2006. The other top responses were income from this farm and income from other investments. There has been a decrease in the number of people who will rely on private pension, and the sale of farmland, livestock, or other farm assets and sale of other property are still less-common sources of income. Among those that will receive income from the farm upon retirement, the majority declared that they plan on depending heavily on this form of income. A little under 80% of the respondents stated that someone in their household receives income from an off-farm source. The greatest majority of respondents do not have a formal succession plan. While the majority of farmers had discussed their succession plan with their spouse or children, a little more than 20% of farmers had not discussed their plan with anyone. Since 2006, there has been a significant increase in the number of respondents who had identified a successor; however, among those who had not, most are still confident that a family member will inherit and keep the farm, and only a very small number think it will be sold or rented out. There has been an enormous increase in respondents that declared that they have a will; however, most farmers do not have a trust. Respondents still identify sons as the main successor. Since 2006, there has been a significant decrease in those identifying daughters as the main successor; in fact, daughters are not claimed as main successors until they are identified as the third successor. While the average age of successor has decreased, the average age of respondent's sons increased from 28 in 2006 to 32 in 2019, while the average age of respondent's daughters increased from 29 to 31 in that same time. In 2019, most farmers responded that they would miss the way of life the most after retirement, while less common responses indicated respondents would miss crop management, contact with other farmers, and working with livestock. Farmers said that they would be pleased to give up the long hours, the manual work on the farm, and the paperwork. When asked about future plans for the farm, most respondents indicated that they would share the farm equally among heirs, to keep it in the family no matter what: "I plan for the farm to stay in the family and be passed down to my children and grandchildren." Another responded "Whatever it takes to keep operation together: land and livestock, we are third generation." A very common response was also to give most of the shares to the farming heir, or let him/her buy from the non-farming heir. "Understand that fair is not equal. Family heirs will get land operation, plus additional land. Now farming heirs will get some land and cash. This plan makes it fair, not equal." Another stated: "Talk - talk - talk to your children. Treat them fairly but not necessarily equally." Many respondents indicated that, instead of splitting the farm, they rather the land be rented out to strangers or neighbors: "Keep the farm as a whole, split income between heirs, or sell and split between heirs." In 2019, as little as 1% of respondents declared that their farm is certified organic.